Parkway Life Reit

Parkway Life Reit: 4Q12 results within expectations. Distributable income was $16.3m, +9.5% yoy, +4.8% qoq. DPU was 2.69 cts, +9.5% yoy, +4.3% qoq. The full yr DPU of 10.31 cts, +7.5% yoy, translates to a yield of 4.5%. For FY12, net property income increase 7.6% yoy to 486.4m, driven by CPI +1% (6.3%) rental growth in Aug ’12 for the Spore portfolio, and contribution from the 3 Japan properties acq in Mar ’12 and the units at Gleneagles Medical Centre Kuala Lumpur acquired in Aug ’12. Addressing concerns regarding its Japan exposure in view of the weakening yen, PLife extended its yen-denominated net income hedges in 2012 for 5 yrs until 1Q17, reducing the volatility of income fluctuations from a weakening yen. Further, PLife adopts a natural hedge to match its Japanese yen-denominated assets (S$438.4m) and liabilities (S$411.3m), ensure the net impact of forex fluctuations on the balance sheet is minimal. UOBK believes upside will be driven by potential acquisitions in Msia from PLife’s sponsor, IHH Healthcare, together with asset enhancements in its Spore hospitals and Japan properties. The house maintains at Buy with raised TP of $2.62 from $2.53.